HSBC forecasts emerging markets to outperform developed peers in H2 2026

Valuation gap and AI-driven growth underpin the bank's bullish outlook for EM equities, as capital flows shift away from expensive US and Western European stocks.

By Handelsavisen Newsroom · Automated 2026-07-19 09:55 UTC · 1 min read

HSBC has issued a bullish forecast for emerging market equities, projecting they will outperform developed markets in the second half of 2026.

The bank cites a combination of attractive valuations and accelerating growth driven by artificial intelligence investments as the primary catalysts for the expected rotation.

The valuation disparity remains stark.

The MSCI Emerging Markets Index is currently trading at 11.5 times forward earnings, significantly cheaper than the 17.5 times multiple for global equities.

This discount provides a margin of safety and upside potential that developed markets, particularly in the US and Western Europe, no longer offer at current levels.

This outlook aligns with a broader shift in institutional sentiment.